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1. Underecognition of what psychologists call reinforcement, and economists call incentives.
Examples: Fedex and xerox
- Federal express case. All packages must be shipped every night, or the whole system fell apart. Essentially, the process had to be completed quickly. But it was failing! Someone realized that they were paying the night shift by the hour instread of by the shift, and once they changed the incentive structure, the system began working!
- -Charlie Munger believes that he's been in the top 5% of people in terms of the recognition of reinforcement, and he also believes that he's underrated it his entire life.
2. Man with a hammer syndrome
To a man with a hammer, everything looks a little bit like a nail. Example: BF Skinner
3. The power of self-denial
The power of reality is too much to bear, and people will deny it until it becomes bearable. For example, the woman whose son is a criminal to all objective observers but who won't accept the reality.
4. Incentive-caused bias which creates agency costs.
Galbladder surgeon who believed the galbladder was the source of all medical evil, made a living by removing people's galbladders. It causes terrible behavior in otherwise good people.
5. Bias from consistency and commitment tendency!
Maxim: What you shout out you pound in!
Example, college students who "put their brains in chains too young" by pounding in their commitments through public protest displays.
Munger refers to this bias as a "superpower" of biases! Max planck asserts that the "old-guard" in physics never really accepted the new theories of physics.
6. Pavlovian association
maxim: Pavlov and dog!
Munger thinks three quarters of advertising works on pure pavlov. He gives the example of coca cola which attempts to be associated with everything great.
The reverse is Persian messenger system. If it becomes scary for a employee to bring to his boss bad news, the boss will work himself into a caccoon and end up making worse and worse decisions. It's safer to act like the persian messenger who goes away to hide than to bring home the news of the battle lost.
7. Bias from skinnerian association. Operant conditioning!
When you give the dog a reward. You will invite horrible behavior from yourself or others if you don't make sure to confirm causation between things where you might identify co-related reward and occurrence between two phenomena.
It's important to do good accounting so that you're not inviting sin!
8. Bias from reciprocation tendency, including the tendency of one on a roll to act as others expect.
Cialdini running around campus, asking people to bring juvenile delinquents to the zoo.
Asks again by making a greater request, backs off on a second request (asking less). Raises compliance for an identical request!
Why it's important to know how the human mind can be manipulated/influenced by its evolved biases
Because otherwise you're like a one legged man in an ass-kicking contest!
What you think may change what you do, but perhaps even more importantly,
what you do may change what you think
8. Bias by over-influence by social proof. That is, the influence of others. Particularly under conditions of social influence? or stress.
Example kitty "genevesian". Don't get caught into waves of social proof. Example, efficient market theory!
9. Bias from sensation caused distortions which ... is overinfluenced by contrast-scale.
eff. Cognition mimics sensation! People are manipulating you all day based on the contrast sensation. For example, real estate agents. Zialdini. Accidents of life such as having a terrible mom/father and its effects on husband/wife choice.
Frog immediately placed in hot water vs. frog placed in room-temp water which is then set to boil.
10. Bias from over-influence of authority
Example: Pilot doing stupid things which co-pilots do not correct. 25% of the time the plane crashes.
11. Bias from deprival superreaction syndrome.
The munger dog. The only way to get the dog to bite you is to try and take away from the dog something in its mouth that was already there.
Coca-cola changing its flavor.
People to not react symetically to
loss and gain
12. Bias from envy/jealousy
Made two out of the ten commandments. Warren buffet says it's not greed that runs the world but envy!
13. Bias from chemical dependency.
Will always cause moral breakdown if there is any NEED. Always involves massive DENIAL.
14. Bias from misgambling compulsion
Skinner created a variable reinforcement rate for his mice, found that it will pound in the behavior better than any other reinforcement pattern.
15. Bias from liking and disliking distortion.
The tendency to be very willing to learn from people you like or who you are like. And vice versa.
17. Bias from the non-mathematical nature of the human brain in its natural state, as it deals with probabilities in its natural state using crude heuristics... uhh
The right way to think is the way that zach gauser? plays bridge
availability kahneman and tversky
If you don't do this, you cannot handle the world...
Array facts on theory structures, answering the question "why?"